RBB(RBB) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - First quarter net income declined to $2,300,000 or $0.13 per share, primarily due to strategic actions taken to address non-performing assets [3] - Non-performing assets were reduced by 20% and net exposure to non-performing loans decreased by 32% to $51,000,000 [3][4] - Net interest income before provisions increased for the third consecutive quarter to $26,200,000 [9] - Net interest margin increased by 12 basis points to 2.88%, driven by a decline in the cost of interest-bearing deposits [7][9] Business Line Data and Key Metrics Changes - Loans held for investment grew by $90,000,000 or 12% on an annualized basis, with strong results from commercial, SBA, and SFR balances [5][6] - Total first quarter loan originations reached $201,000,000 at a blended yield of 6.77% [6] - Non-interest income declined by $4,340,000 to $2,300,000 due to lower gains on the sale of loans [10] Market Data and Key Metrics Changes - Total deposits increased at an 8% annualized rate to $3,140,000,000, with growth in money market accounts and CDs [13] - The ratio of allowance for loan losses to total loans held for investments increased by nine basis points to 1.65% [13] Company Strategy and Development Direction - The company is focusing on resolving non-performing loans quickly while minimizing the impact on earnings and capital [3] - There is an ongoing effort to redeploy capital previously tied up in non-performing assets to increase net interest income in the coming quarters [9] - The company aims to be the bank of choice for Asian Americans nationwide, with a commitment to addressing challenges faced in recent years [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in resolving remaining non-performing assets and expects to report additional progress in upcoming quarters [4] - The company anticipates continued loan growth, albeit at a more moderate pace than the first quarter [7] - Management acknowledged the uncertainty surrounding tariffs but reported no immediate financial impact from current trade dynamics [34][56] Other Important Information - The company has strong capital ratios, with all capital ratios above regulatory well-capitalized levels [14] - The tangible book value per share increased to $24.63 [13] Q&A Session Summary Question: Thoughts on potential share repurchase - Management recognizes that a buyback is one of the best uses of excess capital and is working to implement it [19] Question: Dynamics within the margin and FHLB roll - The FHLB advances are fully priced into the March net interest margin, and the net interest margin is slightly below the quarter's average [21] Question: Margin drag from non-accruals - There is a drag on net interest margin from non-accrual loans, with potential recoveries being considered [24] Question: Loan growth expectations and deposit trends - Management expects to fund loan growth organically and noted a seasonal decline in non-interest bearing deposits [46] Question: Composition of the loan growth pipeline - The pipeline is primarily composed of CRE loans and single-family residences, with C&I loans expected to contribute more in the future [61]